Reply to “They’re only worth a few million. Not really rich”

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Reply to "“They’re only worth a few million. Not really rich”"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]
NP here - Don't kid yourself - there is a HUGE difference between nursing homes and that different matters.  I've spent a fair amount of time with a couple different older relatives while they were in nursing homes.  Thankfully, none of them were in truly awful homes, but there was a fairly large difference between the mediocre and the great homes.  ( Also, my husband works in the medical field and has been in some truly awful nursing homes, so I know that they exist, even if I haven't personally spent much time in them.) At the high end nursing homes, there was sunlight in the rooms, flowers and nice decor in the common areas, all the patients (even the dementia patients) always had their hair done and looked cute and clean, the aides joked with the patients....and best of all, the place didn't smell.  Not at all.  My relatives did decline mentally, but they each had a couple of years where they were well aware where they were....and even during the worst mental periods, I think that they had some awareness of their surroundings.  And for the rest of us, it was much better to visit in a nice nursing home than a dark, kind of smelly one.  
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With a 4M net worth you can draw down at about 160k a year indefinitely. That will cover something nicer than a "mediocre" nursing home (even in the DMV).[/quote]

That's exactly my point of why it's worth it to have money available in retirement.   Let's go with the scenario of one person is in memory care for 5+ years, and the other still wants to live at home, but maybe needs some help around the house.  (a fairly typical scenario, in my experience). So, they really only have $3M available in liquid assets, since $1M locked up in the house.  And by the time that they get to the point of needing more intensive help, they might have already spent down some of that $3M, though they'd also likely be getting Social Security.

The average cost of memory care is ~ $5k/month - let's estimate that it's at least $6k/month in DC, and $7k/month for the really nice care.  In that estimate, memory care would cost $84k/year. Lets say that the homebound spouse is spending $20k/year for help around the house.  So, that's $104k/year just for caregiving.  If they only have $2M left in assets at that point, using the 4% rule, then they can only safely draw down $80k in assets/year.  So adding in social security  - and the homebound spouse living somewhat frugally - then yes, they could cover it.  Maybe they even draw down some money from principle....well, they'll still probably have some money left at the end.  The kids can inherit then.  But if I were this (now) hypothetical couple's child, I would be very glad that they were entering into the caregiving years with a decent chunk of money in the bank.[/quote]

You just lumped a lot of worse case scenarios together (spent a 1/3 of their retirement savings prior to problems, one of the more expensive types of care, no social security, one spouse still in the house, no long term care insurance) and they will end up with enough left over to give their children an inheritance. I find it hard to comprehend that people do not see this as being rich.[/quote]

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